Cape Coral bank becomes latest economy victim

Wake up and good morning. A Cape Coral bank in Lee County south of Tampa Bay on Friday became the second Florida bank to fail this year amid a severe credit crunch and recession. Riverside Bank of the Gulf Coast was closed by Florida bank regulators. The Federal Deposit Insurance Corp., as receiver and to protect most depositors, then sold Riverside to TIB Bank in nearby Naples.

Before we go further with the failed bank, consider this. Four Florida banks have failed since last summer and every one of them has been located along Florida's gulf coast, from Cape Coral (near Fort Myers) north to Ocala. Nationwide, Riverside was one of four banks seized by regulators Friday, bringing the national number to 13 failed banks so far in 2009.

Back to Riverside's failure. Not all Riverside depositors are protected. TIB Bank will not assume $142.6 million in brokered deposits held by Riverside Bank. The FDIC said it will pay the brokers directly for the amount of their funds. Customers who placed money with brokers should contact them directly for more information about the status of their deposits, the FDIC said.

It's getting almost funny to hear so many top executives of about-to-fail banks say they have things under controls and are "just about" to cut a deal to bring in fresh capital and save the bank. It happened again this week at Riverside. According to a story in the Fort Myers News Press, Riverside Chairman Elmer Tabor told the newspaper earlier in the week that he was in the final stages of signing a deal to get an infusion of private capital.

“All in all, everything appears to be going well,” Tabor said at that time.

Apparently not as well as expected. Riverside's failure follows on the heels of the January 30 closing of Ocala National Bank. And in the latter half of 2008, two other banks also failed in Florida: Freedom Bank in Bradenton (not to be confused with Freedom Bank of St. Petersburg), and First Priority Bank in Bradenton. Before this flurry, the last bank to fail in Florida occurred in 2004.

Several other Florida banks that looked dangerously close to failure were sold with regulatory assistance to other financial institutions. So their names stay off the rolls of failures but still are indicators that Florida's struggling economy is claiming more banks in the Sunshine State than might be thought at first. Here are three examples:

1. Last month, a struggling Florida Panhandle bank called the Bank of Bonifay and its parent holding company, Bonifay Holding Co., were purchased by an Alabama insurance company called Protective Life Corp.

3. Coast Bank of Bradenton, one of the early Florida banks to get into real estate lending trouble, was purchased with regulatory blessing by a St. Louis-based banking company.

Due to the observance of Presidents' Day on Monday, Riverside's nine offices will reopen on Tuesday as branches of TIB Bank. Depositors of Riverside Bank will automatically become depositors of TIB Bank. There's more information here and here from the FDIC.

Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers of both banks should continue to use their existing branches until TIB Bank can fully integrate the deposit records of Riverside Bank. Riverside Bank of the Gulf Coast is not affiliated with either Riverside National Bank of Florida, Fort Pierce, or with Riverside Bank of Central Florida, Winter Park.

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Tampa Bay business news and insights are brought to you each day by business columnist Robert Trigaux and his fellow business writers. Venture provides an inside look at Tampa Bay companies as well as events, people, deal, triumphs and failures across the Tampa Bay economy.